Revenue Growth Engine Audioblog

When calculating multiples on profit and revenue, buyers of a business have two basic questions:

Doubt in one or both of these areas erodes the perceived value of your business. Despite decades of hard work by yourself and your team, when buyers get nervous about these two areas, they begin discounting their offer.

Fortunately, there are three things you can do proactively to alleviate the buyer's doubt. When you get these three things right you can actually increase the value of your business.

Hypothetically, let’s say that the buyer discounts their offer by 25% based on their fear that customers and employees will leave. Similarly, what if the value of the business actually increased by 25% based on confidence that not only will employees and customers stick around but that the business is in a position to continue to grow? This 50% swing can literally mean millions of dollars.

What does it take to reduce the doubt that customers and employees will leave? Here are three ideas to consider.

Ideal Clients need everything you sell and they are a good fit with your company culture. Since they need everything you sell, they have a higher value. When they are a good fit with your culture, they have a much higher chance of sticking around. This combination not only maximizes your value by creating a trajectory of exponential growth with cross-sell revenue, but it also reduces client turnover.

Clients don’t buy your products and services, they buy the outcomes your products and services deliver. The initial sale should be the ground floor of value creation. From there, the experience you deliver to your clients should provide increasing levels of value as you help them achieve more outcomes. 

Progressive realization of value can be delivered inside an overall client experience. Yes, client experience needs to include great customer service. However, it needs to go beyond that to provide a journey of increasing value.

The programs that you develop wrap around your products and services to create increasing revenue while building client loyalty. These programs increase client retention. When it comes to maximizing the value of your business, these programs themselves often have appeal and saleable value to you your buyer as they realize that they might be able to adopt some of your best practices in their other businesses.

Programs need to be backed with marketing, sales, and operations processes. In a Revenue Growth Engine®, these processes become like the cylinders of the engine. The more cylinders you have, the more horsepower you get.

Processes are a series of steps for a repeated outcome. You can train employees to follow these processes. This gives the buyer of a business peace of mind that even when some of the current employees leave after the purchase, the company will be able to onboard new employees to continue to deliver these processes. Plus, with processes in place, it becomes easier to scale your marketing and sales teams as new employees have clear job descriptions.

Whether you want to sell your business as you approach retirement or are looking to spin up revenue to exit in 3-5 years, the work you do in these three areas has the potential to flip your multiple from a discount to a premium. While revenue and profit are key drivers of the value of a business, make sure to put programs and processes in place that alleviate the buyer's doubt about the sustainability of that revenue and profit.

A word of warning as we conclude. In the process of creating a Revenue Growth Engine® that attracts ideal clients and delivers increasing value while providing processes that help onboard and retain employees, you may fall in love with your business again and want to keep it in your portfolio for someone else to run for you. Whether you want to exit or decide to hold, building programs and processes that attract and cross-sell Ideal Clients are the keys to maximizing the value of your business.

To discover a model to maximize the value of your business, schedule your confidential 20-minute revenue breakthrough conversation with me by clicking here.